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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live

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Speaker 1: from the heart of Silicon Valley with ed La Loow

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Speaker 1: in San Francisco.

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Speaker 2: This is Bloomberg Tech coming up. Samsung's quarterly profits surges

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Speaker 2: on memory demand, but not enough for investors after a

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Speaker 2: one hundred and fifty percent rally this year, plus, Amazon

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Speaker 2: is back in the bond market, looking to raise at

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Speaker 2: least twenty five billion dollars to fund spending on AI

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Speaker 2: infrastructure and SpaceX joins the NASAK one hundred index as

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Speaker 2: the cell side coverage of Elon Musks company is go

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Speaker 2: for launch. This is what markets look like right now.

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Speaker 2: It is a story about semiconductors and it is pretty

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Speaker 2: ugly out there. It all relates to Samsung's quarterly earnings,

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Speaker 2: which were a sellar set of numbers. So this is

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Speaker 2: not about what's happening with the fundamentals, and fundamentally nothing

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Speaker 2: in the memory chip market is changed. Samsung told us

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Speaker 2: supply is still tight DERAM and nand pricing is going up,

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Speaker 2: and in terms of line of sight for when that

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Speaker 2: supplies dynamic changes, there isn't much visibility beyond the other

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Speaker 2: side of twenty twenty seven overnight. This is what Samsung did.

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Speaker 2: We've become very accustomed, particularly in the Korean market, to swings,

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Speaker 2: both to the upside and the downside. So the Samsung

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Speaker 2: drop of nine percent, that looks dramatic. It was the

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Speaker 2: only the biggest drop on Samsung since June twenty third.

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Speaker 2: What happened. Let's get to Bloomberg's executive editor Peter Elstrom. Okay,

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Speaker 2: revenue more than doubled profit even better relative to the

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Speaker 2: prior quarter. Let's start with the numbers.

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Speaker 3: Yeah, Ed, it's amazing how much time we are now

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Speaker 3: spending talking about Korean chip makers, especially these memory chip makers,

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Speaker 3: because they are such a key part of the market

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Speaker 3: right now, and there are such a key part of

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Speaker 3: the technology industry. So for Samsung, Samsung is unusual. They

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Speaker 3: report their earnings and two slices. This is the preliminary numbers.

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Speaker 3: We only get two numbers. We get revenue, we get

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Speaker 3: operating profit. As you mentioned, revenue more than doubled. Operating

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Speaker 3: profit was up nineteen fold from a year ago. It's

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Speaker 3: a pretty incredible number. They made about fifty eight billion dollars.

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Speaker 3: It could be one of the most profitable companies. It

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Speaker 3: will be one of the most profitable companies in the

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Speaker 3: world for this quarter. They could contest to perhaps be

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Speaker 3: the most profitable company out there. They're making a lot

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Speaker 3: of money, but as you say, it wasn't enough for investors,

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Speaker 3: even though it beat the analyst estimates by about six percent.

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Speaker 3: They were still expecting a.

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Speaker 4: Little bit more.

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Speaker 3: Maybe they wanted some more guidance going into the future here,

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Speaker 3: but it is a signal that expectations are very high

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Speaker 3: for AI right now. Samsung is playing a key role

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Speaker 3: in this, as is sk Heinex. We're going to get

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Speaker 3: more of these numbers. A lot of volatility here.

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Speaker 2: Dad, This is a stock that prior to the numbers

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Speaker 2: hitting was up one hundred and fifty percent year today,

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Speaker 2: zoom out. What is the story for Samsung and Eskpin

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Speaker 2: in career trading this year and what has been the

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Speaker 2: attitude of markets towards the memory names.

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Speaker 4: Yeah, you're making a very good point.

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Speaker 3: Both Samsung and Skhinix have been on a rocket ride

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Speaker 3: this year. Samsung up one hundred and fifty percent, skh

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Speaker 3: Inex up more than that. A lot of this has

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Speaker 3: to do with bullishness on the market. A lot of

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Speaker 3: it has to do with a rising profits. But you

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Speaker 3: also have these leverage ETFs that people are trading where

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Speaker 3: they're trying to get two x or three x exposure

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Speaker 3: to these companies. It's adding to that volatility at that point.

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Speaker 3: So you have a lot of people who truly believe

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Speaker 3: in the AI trade. They truly believe this is going

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Speaker 3: to be a seismic build up that will be very,

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Speaker 3: very important. But you've got a lot of traders bouncing

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Speaker 3: the stocks around a lot. As you mentioned, there's just

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Speaker 3: a lot of volatility here. And what we're seeing now

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Speaker 3: is a lot of the volatility in South Korea is

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Speaker 3: now spilling into other markets. We're seeing it week after week.

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Speaker 2: Bloom Most Peter Elstrom, who leads our coverage of Asia's technology,

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Speaker 2: thank you very much. Let's keep the conversation going focus

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Speaker 2: on AI spending. While Samsung's results highlight the strength of

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Speaker 2: demand for memory chips, Bloomberg Intelligence says the next leg

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Speaker 2: of the investment cycle may be driven by governments as

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Speaker 2: much as the big tech spenders. Congensavanni writes that South

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Speaker 2: Korea's massive AI investment plan reinforces the case for sovereign AI.

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Speaker 2: With roughly eight hundred and eighty billion in plans spending

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Speaker 2: on memory fabs and data centers, helping it stend the

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Speaker 2: semiconductor capex cycle beyond the hyperscalers join us now is

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Speaker 2: Congensavanni Bloomberg Intelligence senior semi conductor analyst. I was so

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Speaker 2: interested in this Bloomberg Intelligence thesis because the same thing

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Speaker 2: happened first with GPUs. Now you're taking it to the

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Speaker 2: memory market. Give me some of your research.

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Speaker 5: Yeah.

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Speaker 6: With the edition of this announced plan, out of which

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Speaker 6: three hundred and certain billion dollars are earmark on AI clusters,

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Speaker 6: AI denta centers, not building factories for memory, this edition

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Speaker 6: now brings the total Soviet AI spending that we have

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Speaker 6: been tracking close to getting to sort of thirty gig

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Speaker 6: awards now on an average, if you take twenty to

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Speaker 6: thirty billion dollars just from the accelerators and the chips

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Speaker 6: going for one gig award, that's a significant number. So

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Speaker 6: we are seeing this team playing out across the different regions.

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Speaker 6: This helps a couple of things, right, reduces your reliance

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Speaker 6: from the purely US hyperscaler and cloud spenders and this

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Speaker 6: group of customers. The Soviet and the governments are very sticky,

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Speaker 6: are very long term and once they dedicate a certain

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Speaker 6: budget allocated to a certain vendor, you have a long

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Speaker 6: term visibility, not just stopping off from quarter to quarter.

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Speaker 2: There have been swings in some of the chip stocks

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Speaker 2: across compute memory, logic and memory to the downside today,

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Speaker 2: the catalyst being Samsung's print. Then you go back to

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Speaker 2: June twenty ninth when Career announced this plan eight hundred

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Speaker 2: and eighty billion dollars spending catalyst to the upside. Right now,

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Speaker 2: what is the trajectory near term for government spending or

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Speaker 2: at least government and support for this industry locale by local.

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Speaker 6: Most of the regions that we track are seeing significant

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Speaker 6: tail winds. In fact, announcement like this actually pressures the

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Speaker 6: other regions. If you're aware, Europe right now is going

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Speaker 6: through their sort of chip sack two point zero and

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Speaker 6: focus on semiconductor, where we expect their numbers that they

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Speaker 6: have announced to actually rise up because there has been

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Speaker 6: a lot of critique that they're not spending up. So

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Speaker 6: when one regions increases the urgency of spending, the regions

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Speaker 6: sort of keep on piling on.

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Speaker 2: kN jen memory is a historically cyclical, historically boom and

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Speaker 2: bus cycle commoditized technology. You are tracking more closely the

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Speaker 2: server design top to tail, the entirety of the data center,

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Speaker 2: not just the compute. What are you seeing in this

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Speaker 2: part of the cycle for memory? Are you seeing something

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Speaker 2: that's different to historical norms.

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Speaker 6: For the most part, are we seeing say similar historical

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Speaker 6: cycles to repeat this time around. But a few things

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Speaker 6: I want to point out that we're seeing different. We

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Speaker 6: are now seeing an advent out of in HBM and

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Speaker 6: a lot of focus from the incumbents like inn Media,

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Speaker 6: but also from the newcomers like Qualcomm and Cerebraus. We're

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Speaker 6: going away from HBM. This could help sort of, you know,

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Speaker 6: slow down the peaks and puffs of this memory cycle. Also,

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Speaker 6: we are seeing a significant new vectors like the aipcs. Right,

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Speaker 6: so we are now expecting NaN's which typically in the

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Speaker 6: past many years have not been considered the sexy or

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Speaker 6: the high growth like HBM should could come back in focus.

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Speaker 6: Given what's what we're seeing with the aipcs and local EDGAI.

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Speaker 2: Running Conjenspanni, who leads us and in conductive coverage at

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Speaker 2: Bloomberg Intelligence. Thank you. Let's get to the equity strategists

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Speaker 2: view and next guest says the AI story is still intact,

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Speaker 2: but after a record run for chip stocks, the group

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Speaker 2: has become more volatile and investors are increasingly questioning the

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Speaker 2: pace and payoff of AI related capex. Joining us now

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Speaker 2: is Angela Cocafe, Senior global investment strategist at Edward Jones.

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Speaker 2: It's an interesting morning where after a massive sell off

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Speaker 2: in Korea, Samsung in particular, we now see very significant

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Speaker 2: declines in US based memory and logic. What is your

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Speaker 2: interpretation of why the market has responded to the Samsung

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Speaker 2: numbers in that way?

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Speaker 7: Yeah, some key takeaways I think are first of all,

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Speaker 7: the numbers look good or strong, the bar is high,

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Speaker 7: and then positioning seems to be crowded, so as investors

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Speaker 7: question and wonder what comes after the strongest word for

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Speaker 7: se conductors on record, we are seeing a bit some

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Speaker 7: signs of fatigue. End user demand is becoming more price sensitive,

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Speaker 7: and the market is penalizing companies that ramp up capex

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Speaker 7: too aggressively. So I think it is a matter of

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Speaker 7: expectations and some healthy skepticism rather than a break in fundamentals.

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Speaker 2: The Socks or Philadelphia Semi Inductor index is down more

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Speaker 2: than six percent at one point in the session down

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Speaker 2: seven percent. That's become quite normal to see the socks

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Speaker 2: go up or down to that level on any given

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Speaker 2: day in the last month. But on aggregate and longer

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Speaker 2: term we've talked about a melt up longer term performance

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Speaker 2: and outside in semiconductors, where are we now? Where have

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Speaker 2: we netted out?

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Speaker 4: Yeah?

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Speaker 7: I think as you point out, the increased volatility in

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Speaker 7: the space is a sign that that theme is maturing

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Speaker 7: a little bit. Many investors recognize this long term secular

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Speaker 7: tailwinds from AI spending, but at the same time we're

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Speaker 7: not in the very early innings of that. Also not

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Speaker 7: at the tail end in our view as well. So

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Speaker 7: as we look at the earnings number in a couple

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Speaker 7: of weeks, we're going to be hearing a lot of

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Speaker 7: updates from these companies and the tech sector and semiconductors

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Speaker 7: is going to be the one leading growth revenue growth

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Speaker 7: more on eleven sectors. Also, we expect more than sixty

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Speaker 7: percent earnings growth, So that shows that again the bar

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Speaker 7: is high, but still we have that fundamental support at

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Speaker 7: the same time as investors still want to participate and

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Speaker 7: maintain exposure to AI and tech we think they should

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Speaker 7: be looking for differentiated sources of return, and we think

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Speaker 7: pairing the AI exposure with some cycnical exposure is the

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Speaker 7: right strategy at this point in time.

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Speaker 2: What does that material like? One of the big stories

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Speaker 2: of this week was Morgan standing Mike Wilson saying their

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Speaker 2: expectation is of rotation out of chips into hyperscalers. Like

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Speaker 2: to lots of people, that's kind of materially the same story.

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Speaker 2: The way on the program we try to I guess

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Speaker 2: spit it up is the capital expenditure deployers and the

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Speaker 2: capital expenditure recipients.

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Speaker 7: Yes, since a lot of the investor concerns are about

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Speaker 7: spending and they have been penalized in the hyperscalers, at

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Speaker 7: some point the hyperscalers could start to slow down the

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Speaker 7: pace of spending, which might be the trigger for that

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Speaker 7: rotation to happen. Given some of the underperformance and relatively

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Speaker 7: low valuations for the Hyperscalers and the Magnificent seven, I

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Speaker 7: don't think it's a stretch to say that potentially we

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Speaker 7: could see some of that rotation, especially after a parabolic

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Speaker 7: move in Semis and the concentration that has been coming

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Speaker 7: with that and of course the Korean market is a

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Speaker 7: great example of that, So we're paying attention to the

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Speaker 7: growth not only the level, but also the growth rate.

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Speaker 7: That second derivative could be peaking in the second quarter.

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Speaker 2: Hey, and I'm going to bring that chart back to

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Speaker 2: the teammate because I think it's worth lingering on. By

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Speaker 2: twenty thirty, capital expenditure for just five names Amazon, Microsoft, Google,

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Speaker 2: Meta Oracle to go through one trillion, Right, we're trying

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Speaker 2: to make sense of why the market's down so severely

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Speaker 2: on a really strong sets of Samsung numbers with little data,

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Speaker 2: but the knowledge that nothing's fundamentally changed supplies tight demand

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Speaker 2: still there. Why, Like, if that's the trajectory of spending,

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Speaker 2: why are we so concerned?

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Speaker 7: Yeah, I think investors are still cognizant of history that

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Speaker 7: the sector of the industry tends to be a cyclical one.

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Speaker 4: So it remains to be seen.

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Speaker 7: Whether we've kind of eliminated those mini cycles with all

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Speaker 7: this AI demand. But I would be more concerned if

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Speaker 7: investors were not worried at all or dismissing some of

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Speaker 7: these risks whether it's going to be a return on

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Speaker 7: all this investment. So maybe it's part of that natural

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Speaker 7: process of two steps forward, one step back for for

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Speaker 7: that trade. But I think there's still remains plenty of

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Speaker 7: opportunity both within tech that rotation within the parts of tech,

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Speaker 7: but also beyond tech as well.

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Speaker 2: As local kafas every joints. Thank you very much. Now

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Speaker 2: coming up, Amazon is back in the bond market, looking

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Speaker 2: to raise at least twenty five billion, per Bloomberg's reporting details. Next,

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Speaker 2: this is Bloomberg Tech. Let's turned to today's big number.

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Speaker 2: Twenty five billion dollars. That's how much Amazon's looking to

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Speaker 2: raise in its latest US bond sale. According to sources,

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Speaker 2: the offering could ultimately grow even larger depending on investors demand.

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Speaker 2: The cell comes as Amazon ramps up spending on AI infrastructure,

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Speaker 2: the company's marketing debt, and as many as eight ranches,

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Speaker 2: with proceeds intended for general corporate purposes, including debt repayment, acquisitions,

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Speaker 2: and capital expenditures. Bloomberg Intelligence says the company's capex is

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Speaker 2: likely to top its current two hundred billion guidance for

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Speaker 2: this year and next year could approach three hundred billion

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Speaker 2: as demand four AI continues to outplace. Robert Shipman of

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Speaker 2: Bloomberg Intelligence here with the react. Now, capital expenditures can

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Speaker 2: also go up because it's more expensive to do things right,

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Speaker 2: you build a data center, you have construction labor inflation,

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Speaker 2: as we talked about through the show, memory price invation.

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Speaker 2: But you're specifically looking at the way to cost the

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Speaker 2: capital why the corporate bond market works well, and now

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Speaker 2: you're looking at the pro Former cash amount, give me

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Speaker 2: your thesis.

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Speaker 8: Well, first of all, twenty five billion, it's not that

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Speaker 8: big of a number right now.

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Speaker 2: These guys have already we just said it was the

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Speaker 2: big number of it.

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Speaker 8: Well, it's getting bigger, okay, and it's probably.

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Speaker 2: Going to be more. That's why I ask you about

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Speaker 2: the pro Former cap.

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Speaker 8: They have raised almost seventy billion across currencies this year already,

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Speaker 8: right and their cash number is up above one hundred

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Speaker 8: and fifty billion. This clearly implies that spending is going up.

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Speaker 8: It's going up for a variety of reasons. One, the

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Speaker 8: cost of everything that they're buying is going up. Two

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Speaker 8: is the amount of stuff they need to buy is

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Speaker 8: also going up, and they are trying to frontload as

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Speaker 8: much as they can. Three, they're also making investments in

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Speaker 8: others like open AI and anthropic and they're feeding the

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Speaker 8: ecosystem similar to similar to what Nvidio is doing. So

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Speaker 8: I don't think we should be surprised by these numbers.

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Speaker 8: And I just think they're going to keep getting bigger

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Speaker 8: and bigger.

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Speaker 2: You know, bondholders an Amazon bondholders happy to be one right.

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Speaker 2: I get that corporate credit is not my strongest suit.

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Speaker 2: All I can do is look at what Andy Jasse

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Speaker 2: said at the last earning school cap to expend it

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Speaker 2: to growth outpaces revenue growth until such time that the

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Speaker 2: thing you've actually deployed the capex on does something for

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Speaker 2: you in return, you build a data center and until

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Speaker 2: it runs workloads, it doesn't generate revenue. They're trying to

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Speaker 2: manage that. Yeah, you think they're doing a good job.

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Speaker 8: I actually think they are. I think investors need to

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Speaker 8: be patient. It's historically not a patient market, whether a

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Speaker 8: bomb market or stock market. But the amount of spending

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Speaker 8: that you're going to see over the next couple of

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Speaker 8: years is going to far exceed the amount of cash

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Speaker 8: that's coming in. So people are going to constantly question

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Speaker 8: whether or not there's ever going to be a return.

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Speaker 8: And you've, quite frankly, even if you see very very

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Speaker 8: strong cloud numbers or if you see some AI monetization

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Speaker 8: still on a relative scale, it's not going to be

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Speaker 8: anywhere close to what their capital spending is. So what

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Speaker 8: has to happen? I think bomb market has to hold

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Speaker 8: up right, Yields can't go through the roof. They need

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Speaker 8: to have access to cheap, low cost capital. They do,

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Speaker 8: and they're taking down as much of that as they can.

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Speaker 8: They need to show that they're monetizing and continuing to

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Speaker 8: show really strong double digit growth across their AI and

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Speaker 8: cloud businesses. And then three, they need to continue to

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Speaker 8: convince the rating agencies that none of this matters.

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Speaker 2: So that end, we just have fifteen seconds. Why is

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Speaker 2: Amazon the creme to the creme of issue is.

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Speaker 8: Well because of all the debt that they've issued, leverage

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Speaker 8: is still really low. It's well below this two and

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Speaker 8: a half times target that the rating agencies have, so

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Speaker 8: they have room to borrow a lot more, and they

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Speaker 8: generate a ton of cash flow from their other core

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Speaker 8: profitable businesses, and they can help finance long term growth

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Speaker 8: with short term borrowing.

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Speaker 2: Robert Schiffan and Blue Meg Intelligence, thank you very much.

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Speaker 2: Let's go back to the market for a second and

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Speaker 2: take a look at shares of Rivian, on track for

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Speaker 2: its worst day since November twenty twenty four. The evmaker

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Speaker 2: said it will sell seventy five million shares to fund

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Speaker 2: equity contributions related to a US Department of Energy loan.

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Speaker 2: Now Goldman Sachs is leading the share sale, according to

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Speaker 2: a filing with the SEC. With the offering, Rivian's able

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Speaker 2: to capitalize on a run up in the stock in

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Speaker 2: recent days, fueled in part by strong quarterly delivery results

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Speaker 2: and the inter set of its new lower cost R

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Speaker 2: two line of SUVs. That's the confusion. Last night, the

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Speaker 2: stock closed at a very high level. Now we're down

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Speaker 2: fourteen percent at one point in session, on track for

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Speaker 2: our worst day since February twenty twenty four. So the

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Speaker 2: market factoring dilution now coming up. SpaceX joins the Nasdaq

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Speaker 2: one hundred index as sellsy coverage of Elon must company

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Speaker 2: kicks off. We've got the details. Next to Sisplinberg Tech,

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Speaker 2: SpaceX joins the Nazak one hundred index today, and as

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Speaker 2: it does, at least six brokers of launched coverage of

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Speaker 2: the stock, with by ratings, offering investors insight into the

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Speaker 2: valuation beyond being a musk driven moonshot. Let's discuss with

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Speaker 2: most baby lipshots on the post IPO side and then

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Speaker 2: Jordan Fitzgerald on the cell side. Both of those stories

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Speaker 2: are post IPO mechanics. Let's start with inclusion in NASAK

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Speaker 2: one hundred index. We knew it was coming. It was

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Speaker 2: an accelerated timeline for them to do. So now what happens, well,

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Speaker 2: now it's part of it.

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Speaker 5: So the main thing to keep in mind is that

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Speaker 5: because it's not fully distributed, so small flow, it accounts

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Speaker 5: for a smaller percentage, So it's a relatively low flow

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Speaker 5: in terms of the makeup for the Nazaq one hundred

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Speaker 5: more kin to a Palo Alto networks. But what that

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Speaker 5: really means is, if you're buying the queues, you are

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Speaker 5: now allocating a little more than one percent of that

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Speaker 5: cash directly to SpaceX. So there is a bit of

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Speaker 5: a fundamental floor if you will, from that regard. But

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Speaker 5: the main thing is stocks down more than five percent.

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Speaker 5: A lot of the index funds who track this had

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Speaker 5: already gotten in ahead of this.

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Speaker 2: Is again I mentioned in simple terms, they were mandated

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Speaker 2: to either buy SpaceX to represent its waiting on the

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Speaker 2: index in their own funds or sell some other stuff

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Speaker 2: for it to catch up. Now, how should I put this?

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Speaker 2: Are we surprised that there are so many bullish names

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Speaker 2: on the cell side on SpaceX now that they're allowed

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Speaker 2: to initiate coverage Jordan?

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Speaker 9: I mean, personally, I can't say I'm surprised. We've gotten

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Speaker 9: a whole slew of bullish ratings on SpaceX as this

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Speaker 9: quiet period has ended. Most notably, we've got our street

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Speaker 9: high price target at Raymond James. That's eight hundred dollars

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Speaker 9: for its price target, and they expect revenue to multiply

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Speaker 9: by twenty times by twenty This is.

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Speaker 2: The state of play. Twenty eight buys, five holds one cell.

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Speaker 2: I think based on the latest terminal data.

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Speaker 9: That's what I'm seeing as well ed, and that cell

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Speaker 9: was pre existing.

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Speaker 2: We didn't get that today.

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Speaker 9: And really all all of the analysts who work at

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Speaker 9: banks that covered the IPO are getting to make their

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Speaker 9: comments today and they've just been overwhelmingly positive.

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Speaker 2: Is there any kind of theme, like you know, in

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Speaker 2: some cases in the price target, some of the firms

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Speaker 2: will have signed a very low dollar value to the

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Speaker 2: space bit of the business. For many it's an AI company.

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Speaker 9: I mean, everyone looking at SpaceX kind of use it,

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Speaker 9: no pun intended as a moonshot. They think that this

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Speaker 9: company is going to change the world, and they don't

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Speaker 9: really have a limited view of its capacity to do so.

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Speaker 9: They view space as one part of musk scram vision

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Speaker 9: for his rewriting of the future, but they kind of

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Speaker 9: use SpaceX as a as a launch pad to get

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Speaker 9: to that vision and from us to add on whatever

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Speaker 9: he sees as part of that future onto the company

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Speaker 9: and not just a satellite business or rocket launch business.

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Speaker 2: If you didn't audit of mine and Bailey's email traffic

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Speaker 2: of the last month, a lot of it is just

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Speaker 2: us sending references in the prospectus back and forth to

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Speaker 2: each other. But that was all what the perspectives was about, right,

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Speaker 2: AI Future. I'm looking at shaz one hundred and fifty

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Speaker 2: one seventy five a share, so pretty close to where

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Speaker 2: that debut trade was. Is there anything out in the

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Speaker 2: markets we need to know about to this point, like

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Speaker 2: we've respected your job kind of done now Well.

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Speaker 5: No, I think it is, and I think the big

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Speaker 5: question now ed is when we do get to earnings

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Speaker 5: that gets ready to unlock a number of shares, so

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Speaker 5: it's no longer going to be a question of what

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Speaker 5: fundamental catalyst is there. Much like when Tesla reports, you know,

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Speaker 5: auto sales, it doesn't matter as.

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Speaker 2: Much for the stock.

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Speaker 5: The big question is will Elon Musk talk up some

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Speaker 5: of these ambitions and then the massive unlock tied to

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Speaker 5: that event, and then the potential further unlock if the

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Speaker 5: shares continue to trade about thirty percent above that opens

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Speaker 5: up more capacity, more liquidity. Those are the events structurally

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Speaker 5: that do matter from.

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Speaker 2: An estimated earnings August seventeenth. But you know are in

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Speaker 2: the air, Jordan. What do we watch for next? On

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Speaker 2: the cell side? Just more initiation coverage?

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Speaker 9: I mean, if you're me, I'm watching for any mention

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Speaker 9: of the two together. We got r WEC boosting the

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Speaker 9: prist target on Tesla today based on the potential for

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Speaker 9: murder between those troganies. That's all anyone wants to talk about,

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Speaker 9: all anyone wants.

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Speaker 2: To hear about.

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Speaker 9: And they really do see it as twenty five to

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Speaker 9: thirty percent a creative to the stock, just this potential

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Speaker 9: for them.

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Speaker 2: Merger right, Regular viewers of Bloomberg Tech, No, we've discussed

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Speaker 2: the idea of a Tesla and SpaceX merger. No new

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Speaker 2: reporting on it, though Bloomberg's Bata Lipschaltz and Jordan Fitzgerald

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Speaker 2: thank you both very much. Coming up in the program,

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Speaker 2: we've got even more from a SpaceX investor and why

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Speaker 2: he sees this stock as more than just a must led.

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Speaker 2: Moonshot shares not having the best day ever. They are

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Speaker 2: down now five and a half percent, near to where

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Speaker 2: the debut trade was halftime in the program. By the way, spoiler,

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Speaker 2: I'm in New York City this week. There's a lot

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Speaker 2: going on. This is Bloomberg Tech. Welcome back to Bloomberg Tech.

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Speaker 2: Let's go over to anchor A, Turkey, where NATO leaders

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Speaker 2: are currently meeting and just signed defense deals worth at

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Speaker 2: least fifty billion dollars. According to a NATO official. The

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Speaker 2: deal includes investments in space and surveillance. Bloomberg Surveillance co

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Speaker 2: hosts am Rehoder and is live from Ancora. Joins us

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Speaker 2: more AMH.

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Speaker 10: Possible Future without the Dance Well a following on from

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Speaker 10: last year's NATO summit, this year's really as Mark Rutta,

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Speaker 10: the NATO Secretary General, put it as a reindustrialization of

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Speaker 10: the defense sector between Transatlantic partners. So basically that is

436
00:23:35,560 --> 00:23:38,360
Speaker 10: why you're going to see a lot of deals announced

437
00:23:38,440 --> 00:23:40,800
Speaker 10: on the sidelines. These countries have to get to the

438
00:23:40,840 --> 00:23:43,879
Speaker 10: five percent of GDP targets three and a half percent

439
00:23:44,080 --> 00:23:46,600
Speaker 10: percent of that has to go to hardware, ammunitions in

440
00:23:46,680 --> 00:23:49,040
Speaker 10: their one and a half percent of that, port, bridges, roads,

441
00:23:49,119 --> 00:23:53,320
Speaker 10: anything that really is able to help support the industrial base.

442
00:23:53,560 --> 00:23:55,800
Speaker 10: And when you look at these deals, you can really

443
00:23:55,840 --> 00:23:58,480
Speaker 10: take away two points. On one level, the United States

444
00:23:58,480 --> 00:24:01,240
Speaker 10: isn't going anywhere with its industrial drill base. They're still

445
00:24:01,280 --> 00:24:04,760
Speaker 10: relying on things like the Triton surveillance system, and you

446
00:24:04,920 --> 00:24:07,200
Speaker 10: see European countries wanting to get their hands on that.

447
00:24:07,640 --> 00:24:10,879
Speaker 10: But in other parts you actually see a push towards

448
00:24:11,200 --> 00:24:15,879
Speaker 10: trying to use local European defense contractors like SAP instead

449
00:24:15,920 --> 00:24:19,520
Speaker 10: of instead of Boeing. So you see basically a two

450
00:24:19,640 --> 00:24:22,639
Speaker 10: prong approach when it comes to European countries that are

451
00:24:22,840 --> 00:24:26,320
Speaker 10: trying to meet the demands of NATO, especially at a

452
00:24:26,400 --> 00:24:29,280
Speaker 10: time when the US right now is under a six

453
00:24:29,400 --> 00:24:33,399
Speaker 10: month review of its defense posture within the European Union.

454
00:24:33,760 --> 00:24:37,200
Speaker 2: Bloom Eggsamory Horde and live NATO. Thank you very much. Indeed,

455
00:24:37,560 --> 00:24:39,680
Speaker 2: recap this is where market stands. So the Na's that

456
00:24:39,800 --> 00:24:43,440
Speaker 2: one hundred, and the Philadelphia Semiconductor Index this looks bad.

457
00:24:43,560 --> 00:24:46,840
Speaker 2: This looks ugly, But in both cases we're on track

458
00:24:46,920 --> 00:24:49,720
Speaker 2: for our biggest drop since June twenty third. It's become

459
00:24:50,160 --> 00:24:53,399
Speaker 2: in the case of the socks and semiconductors, very normal

460
00:24:53,720 --> 00:24:56,480
Speaker 2: to see a move of five eight percent in that

461
00:24:56,720 --> 00:24:59,960
Speaker 2: range to both the upside and downside. It's called volatile.

462
00:25:00,920 --> 00:25:04,359
Speaker 2: But there is a bigger question about investor attitude to

463
00:25:04,400 --> 00:25:08,520
Speaker 2: the AI trade, particularly of chips. Bloomberg writing, the Magnificent

464
00:25:08,680 --> 00:25:12,080
Speaker 2: seven is losing its luster too. Investors have crowned a

465
00:25:12,240 --> 00:25:15,520
Speaker 2: new set of stocks as the favored investment, funneling money

466
00:25:15,760 --> 00:25:19,520
Speaker 2: into companies building out the AI boom. The turning tides,

467
00:25:19,840 --> 00:25:22,440
Speaker 2: so the AIS here to stay, but those investing in

468
00:25:22,520 --> 00:25:26,840
Speaker 2: it are penalized. Bloomberg Ryan for Selica has the reporting again.

469
00:25:26,880 --> 00:25:29,800
Speaker 2: I just want to acknowledge it's kind of noisy out

470
00:25:29,840 --> 00:25:33,399
Speaker 2: there today right particularly post Samsung. But you've taken a

471
00:25:33,440 --> 00:25:35,600
Speaker 2: look at the mag seven, and then you're looking at

472
00:25:35,600 --> 00:25:38,440
Speaker 2: how the market's treating the mag seven relative to everything else.

473
00:25:38,840 --> 00:25:42,560
Speaker 2: What's the reporting? Yeah, good morning, Thanks for having me.

474
00:25:42,800 --> 00:25:45,600
Speaker 11: So the MAG seven had become something of an afterthought

475
00:25:45,680 --> 00:25:48,920
Speaker 11: within the market following years where they were really the

476
00:25:49,119 --> 00:25:52,680
Speaker 11: primary leaders. Like you said, the nature of the AI

477
00:25:52,840 --> 00:25:56,600
Speaker 11: trade has really been evolving, and we're no longer focusing

478
00:25:56,720 --> 00:26:01,800
Speaker 11: on your Microsoft's or Alphabet, Amazons or metas. Now the

479
00:26:01,920 --> 00:26:05,200
Speaker 11: real focus is on where the current bottleneck is within

480
00:26:05,359 --> 00:26:08,560
Speaker 11: AI infrastructure at the moment, that is in the memory

481
00:26:08,680 --> 00:26:11,840
Speaker 11: and storage space. So companies like Micron, like sand Dis

482
00:26:11,960 --> 00:26:16,199
Speaker 11: like Western Digital, these stocks have seen absolutely enormous gains

483
00:26:16,280 --> 00:26:18,919
Speaker 11: this year, while Microsoft is down I think more than

484
00:26:18,960 --> 00:26:21,240
Speaker 11: twenty percent. We've seen a lot of struggling among the

485
00:26:21,280 --> 00:26:24,280
Speaker 11: companies that were for a long time really sort of

486
00:26:24,359 --> 00:26:28,440
Speaker 11: at the top of the leaderboard. Is there within the

487
00:26:28,560 --> 00:26:34,360
Speaker 11: MAG seven some differentiation. So Alphabet has done pretty well

488
00:26:34,440 --> 00:26:36,679
Speaker 11: this year. All of the Mac seven socks are underperforming

489
00:26:36,720 --> 00:26:39,760
Speaker 11: the NASAQ one hundred, but in the group, Alphabet's hold

490
00:26:39,800 --> 00:26:41,840
Speaker 11: on pretty well. I think there continues to be a

491
00:26:41,920 --> 00:26:45,360
Speaker 11: lot of optimism surrounding its position with AI, not only

492
00:26:45,480 --> 00:26:48,719
Speaker 11: with Gemini its AI model, but also it's Chip's business

493
00:26:48,960 --> 00:26:52,119
Speaker 11: with YouTube, with Waymo, all these sharat of things working

494
00:26:52,200 --> 00:26:55,120
Speaker 11: in concert with each other. There's a lot more skepticism

495
00:26:55,280 --> 00:26:58,720
Speaker 11: about microfont Microsoft in contrast, like I said, that stock

496
00:26:58,840 --> 00:27:00,760
Speaker 11: is down more than twenty percent. I think it just

497
00:27:00,880 --> 00:27:04,440
Speaker 11: had its worst monthly performance since December two thousand, So

498
00:27:04,520 --> 00:27:07,160
Speaker 11: the dot com era, there's a lot of skepticism there.

499
00:27:07,240 --> 00:27:10,440
Speaker 11: All these companies are spending very aggressively on AI, and

500
00:27:10,520 --> 00:27:12,479
Speaker 11: so far it really seems like a mixed bag as

501
00:27:12,520 --> 00:27:14,720
Speaker 11: far as what kind of return are they getting from this,

502
00:27:15,040 --> 00:27:18,600
Speaker 11: what's the timeline for that return, and in the meantime,

503
00:27:18,760 --> 00:27:20,680
Speaker 11: what is this really doing to their cash flow their

504
00:27:20,720 --> 00:27:24,560
Speaker 11: cash balances. Some companies are raising equity or tapping the

505
00:27:24,640 --> 00:27:27,800
Speaker 11: debt markets. There's just a lot more skittishness around those

506
00:27:27,920 --> 00:27:30,480
Speaker 11: kinds of things, even if there's continues to be a

507
00:27:30,600 --> 00:27:33,480
Speaker 11: lot of long term optimism that eventually all this AI

508
00:27:33,600 --> 00:27:36,119
Speaker 11: infrastructure in Capex will pay off.

509
00:27:36,200 --> 00:27:38,920
Speaker 2: Ran very quickly. We reflect in the show today on

510
00:27:39,040 --> 00:27:42,239
Speaker 2: the short term pressure for chip stocks, but in your

511
00:27:42,320 --> 00:27:44,560
Speaker 2: piece you make the point that zoom out eya today

512
00:27:45,800 --> 00:27:47,000
Speaker 2: chip stocks have had a great run.

513
00:27:47,600 --> 00:27:50,200
Speaker 11: Yeah, chips are coming up their best ever quarterly gain.

514
00:27:50,440 --> 00:27:54,840
Speaker 11: They remain extremely strong for this year. They've been incredibly volatile,

515
00:27:54,920 --> 00:27:58,080
Speaker 11: especially if you look at them relative to software stocks. Basically,

516
00:27:58,119 --> 00:27:59,880
Speaker 11: if one of them is rising, the other one is falling,

517
00:28:00,119 --> 00:28:03,880
Speaker 11: and vice versa. But overall, chips remain very strong this year,

518
00:28:04,160 --> 00:28:06,080
Speaker 11: but with a lot of elevated volatility.

519
00:28:06,520 --> 00:28:10,119
Speaker 2: Pretty nice, Ryan for Seneca, thank you very much. Benefiting

520
00:28:10,240 --> 00:28:14,159
Speaker 2: from this shift towards AI in parts in SpaceX and

521
00:28:14,280 --> 00:28:17,439
Speaker 2: the broker calls coming out today. We just went through

522
00:28:17,480 --> 00:28:19,240
Speaker 2: them with Jordan right as well as the idea of

523
00:28:19,280 --> 00:28:22,080
Speaker 2: the Nazaq one hundred inclusion, kind of setting a price

524
00:28:22,160 --> 00:28:25,120
Speaker 2: floor for a stock that could be headed for the stars.

525
00:28:25,320 --> 00:28:28,480
Speaker 2: According to our next guest, Joe Shulman is the founder,

526
00:28:28,560 --> 00:28:32,360
Speaker 2: managing director and CIO of vir Shares. The firms XO,

527
00:28:32,680 --> 00:28:36,280
Speaker 2: VR ETF had approximately two hundred and forty six million

528
00:28:36,320 --> 00:28:39,920
Speaker 2: dollars in SpaceX exposure ahead of the IPO. Now things

529
00:28:40,000 --> 00:28:41,320
Speaker 2: have changed since, Yeah.

530
00:28:41,200 --> 00:28:44,440
Speaker 12: We're up to about three hundred and seventy million. It

531
00:28:44,520 --> 00:28:48,040
Speaker 12: Actually SpaceX gave us about one hundred and thirty million

532
00:28:48,040 --> 00:28:49,920
Speaker 12: dollars of profit coincide with your numbers.

533
00:28:50,600 --> 00:28:53,320
Speaker 4: Eighty four million of that was in June alone.

534
00:28:53,000 --> 00:28:55,600
Speaker 12: Which gave us a five point three percent return, contributed

535
00:28:55,760 --> 00:28:58,600
Speaker 12: about seventy five percent of our performance for that month

536
00:28:58,840 --> 00:29:00,880
Speaker 12: when the market was generally done as much as two

537
00:29:00,920 --> 00:29:01,640
Speaker 12: point zero percent for.

538
00:29:01,800 --> 00:29:04,320
Speaker 2: We get to the backstory here. So you were able

539
00:29:04,400 --> 00:29:07,680
Speaker 2: to include SpaceX in an ETF product when it was

540
00:29:07,680 --> 00:29:09,840
Speaker 2: still a private company, right, so.

541
00:29:10,000 --> 00:29:11,880
Speaker 4: We were the first ones to do this.

542
00:29:12,120 --> 00:29:18,280
Speaker 12: We started, we rebranded, relaunched, repositioned XOVR in August twenty

543
00:29:18,400 --> 00:29:20,280
Speaker 12: twenty four, so the first one to do this. We

544
00:29:20,400 --> 00:29:23,520
Speaker 12: bought our first position SpaceX in December twenty twenty four.

545
00:29:24,160 --> 00:29:26,760
Speaker 12: We bought in something called an SPV, a special purpose vehicle.

546
00:29:27,000 --> 00:29:29,640
Speaker 2: The Bloomberg Tech audience knows about s hopse we're going

547
00:29:29,680 --> 00:29:30,480
Speaker 2: to get to it, keep going.

548
00:29:30,920 --> 00:29:32,280
Speaker 4: So we got into a position.

549
00:29:32,600 --> 00:29:35,480
Speaker 12: We repositioned it later on into something called a zero

550
00:29:35,720 --> 00:29:39,680
Speaker 12: zero no management feed, no carry. We increased our stakes

551
00:29:39,720 --> 00:29:42,600
Speaker 12: several times. We actually increased it twice during the second

552
00:29:42,680 --> 00:29:45,720
Speaker 12: quarter twenty twenty six, which gave us about a fourteen

553
00:29:45,760 --> 00:29:48,200
Speaker 12: percent position going into the IPI. And one of the

554
00:29:48,240 --> 00:29:50,640
Speaker 12: things we did is we had a shareholder protection plan

555
00:29:50,720 --> 00:29:54,160
Speaker 12: which prevented a big run up of flows in the

556
00:29:54,240 --> 00:29:57,280
Speaker 12: week preceding the IPO. You've probably talked about it before

557
00:29:57,280 --> 00:30:00,600
Speaker 12: in your show. Many ETFs have had massive them flows

558
00:30:01,040 --> 00:30:04,240
Speaker 12: preceding big events. We kept that money out probably turned

559
00:30:04,240 --> 00:30:07,520
Speaker 12: away more than a billion dollars in our estimates, maybe

560
00:30:07,560 --> 00:30:09,760
Speaker 12: several billion dollars to make sure we had a good

561
00:30:09,800 --> 00:30:12,560
Speaker 12: weight go for shareholders going into the event.

562
00:30:13,440 --> 00:30:16,000
Speaker 2: The reason, you know, if you're talking about SpaceX today

563
00:30:16,040 --> 00:30:19,800
Speaker 2: in part is NASDAQ one hundred inclusion that was accelerated,

564
00:30:20,120 --> 00:30:21,600
Speaker 2: and we went through earlier in the show about the

565
00:30:21,600 --> 00:30:23,440
Speaker 2: mechanics of that. Right, if you're a fund manager in

566
00:30:23,480 --> 00:30:25,880
Speaker 2: the world that tracks the queues for that index, you

567
00:30:25,960 --> 00:30:29,520
Speaker 2: need to take some action make sure SpaceX and it's

568
00:30:29,600 --> 00:30:31,719
Speaker 2: waiting on the index, is represented in your fund. Right,

569
00:30:31,880 --> 00:30:33,280
Speaker 2: how did that impact you if at all?

570
00:30:33,560 --> 00:30:36,000
Speaker 12: Well, so we're seeing it today the market. You know,

571
00:30:36,080 --> 00:30:40,000
Speaker 12: the SpaceX is a little down today, little percentage. Yeah so,

572
00:30:40,120 --> 00:30:41,720
Speaker 12: but we think, you know, long term, we think it's

573
00:30:41,720 --> 00:30:43,680
Speaker 12: a bullish sign. I mean, we've got to remember the

574
00:30:43,840 --> 00:30:47,800
Speaker 12: NASAC NASAK has about eight hundred billion behind it pass

575
00:30:47,880 --> 00:30:51,320
Speaker 12: of money that represents, at one percent weight, about eight

576
00:30:51,400 --> 00:30:55,000
Speaker 12: billion dollars. We've got to remember the the SpaceX has

577
00:30:55,000 --> 00:30:57,760
Speaker 12: been traded about nineteen billion per day. It's not all

578
00:30:57,840 --> 00:31:00,200
Speaker 12: coming in today in terms of the eight billion, but

579
00:31:00,280 --> 00:31:02,400
Speaker 12: it's the start. And then we've got to remember that

580
00:31:02,480 --> 00:31:06,240
Speaker 12: four hundred billion. I'm sorry, four one hundred billions accused,

581
00:31:06,240 --> 00:31:08,640
Speaker 12: a long four billion of that will be coming in.

582
00:31:08,840 --> 00:31:12,360
Speaker 4: So this is all coupled with the Russells, the.

583
00:31:12,600 --> 00:31:15,360
Speaker 12: MSCIS and so forth, twenty five billion of passive money

584
00:31:15,400 --> 00:31:17,280
Speaker 12: coming in that's going to help boost the stock for

585
00:31:17,280 --> 00:31:17,920
Speaker 12: a period of time.

586
00:31:18,080 --> 00:31:19,760
Speaker 2: So I'm grateful to have you here in the studio

587
00:31:19,800 --> 00:31:21,840
Speaker 2: with me today. There was a time, maybe just for

588
00:31:21,880 --> 00:31:24,360
Speaker 2: a hot second, where you were kind of out there alone. Oh,

589
00:31:25,040 --> 00:31:26,760
Speaker 2: I'm trying to work out and to describe this, but

590
00:31:26,800 --> 00:31:29,240
Speaker 2: you were the only ETF, right for a period of time, right,

591
00:31:29,400 --> 00:31:31,760
Speaker 2: that had SpaceX. That's true? Right?

592
00:31:32,320 --> 00:31:32,480
Speaker 4: Then?

593
00:31:32,760 --> 00:31:35,880
Speaker 2: Everyone correct? Did I've been trying to look at what's

594
00:31:35,920 --> 00:31:38,680
Speaker 2: happened since so SpaceX went public in June over I

595
00:31:38,720 --> 00:31:42,080
Speaker 2: think the fund has seen outflows a little bit.

596
00:31:42,880 --> 00:31:44,160
Speaker 4: We've lost about two hundred million.

597
00:31:44,200 --> 00:31:46,920
Speaker 12: Some of the other funds that had SpaceX one in

598
00:31:47,000 --> 00:31:51,120
Speaker 12: particular that got in in late March, I think they're

599
00:31:51,160 --> 00:31:54,000
Speaker 12: down thirty percent in terms of returns alone, and they

600
00:31:54,120 --> 00:31:59,360
Speaker 12: lost more than half their funds. Another ETF lost three quarters.

601
00:31:59,440 --> 00:32:02,480
Speaker 12: We've lost about two hundred million. We're not taking it

602
00:32:02,560 --> 00:32:06,040
Speaker 12: for granted. I mean, we're not a space only etfre

603
00:32:06,600 --> 00:32:09,160
Speaker 12: We have the Entrepreneur thirty Total Return Index, which is

604
00:32:09,200 --> 00:32:12,040
Speaker 12: a twenty one year track record, and that has one

605
00:32:12,080 --> 00:32:13,640
Speaker 12: of the strongest, if not the strong.

606
00:32:13,600 --> 00:32:15,880
Speaker 2: I'm looking at the holding, so SpaceX is up there, right.

607
00:32:15,920 --> 00:32:18,880
Speaker 12: It's the top holding, seventeen eighteen, n Nvidia, then Nvidia,

608
00:32:19,200 --> 00:32:21,640
Speaker 12: and then we have other stocks like a Sterilabs, which

609
00:32:22,360 --> 00:32:24,640
Speaker 12: was very strong for US. It's four hundred percent in

610
00:32:24,680 --> 00:32:25,680
Speaker 12: the app love and and other things.

611
00:32:25,680 --> 00:32:28,440
Speaker 2: So I appreciate the transparency on the frows and also

612
00:32:28,520 --> 00:32:30,960
Speaker 2: the origin story. You know, we've covered a lot of

613
00:32:31,040 --> 00:32:33,160
Speaker 2: some of the concern about SPVs. Right, what are you

614
00:32:33,240 --> 00:32:35,520
Speaker 2: really buying into? And in the end, what did you

615
00:32:35,600 --> 00:32:38,960
Speaker 2: really get? Now with SpaceX, the data shows it. Let's

616
00:32:39,000 --> 00:32:41,479
Speaker 2: get you a fsis right. You know you are bullish

617
00:32:41,520 --> 00:32:44,560
Speaker 2: on SpaceX, right, which part of SpaceX.

618
00:32:44,160 --> 00:32:46,520
Speaker 12: Well, I mean, as you know, there's a three engine empire, right,

619
00:32:46,560 --> 00:32:49,120
Speaker 12: You've got the launch where they dominate ninety percent and

620
00:32:49,880 --> 00:32:51,520
Speaker 12: even the competitors are using them now.

621
00:32:51,640 --> 00:32:52,480
Speaker 4: So they've got ten.

622
00:32:52,400 --> 00:32:55,760
Speaker 12: Thousand satellites in space, they dominate this market. They've got

623
00:32:55,800 --> 00:32:58,600
Speaker 12: a clear mote in that area. Their costs have gone

624
00:32:58,640 --> 00:33:00,960
Speaker 12: down from fifty four thousand and down to about two

625
00:33:01,000 --> 00:33:03,640
Speaker 12: thousand per kilogram. We look at NASA, which over the

626
00:33:03,720 --> 00:33:06,360
Speaker 12: last thirty forty years has gone up from you know,

627
00:33:06,440 --> 00:33:08,400
Speaker 12: fifty four thousand up to fifty eight thousand.

628
00:33:08,480 --> 00:33:09,920
Speaker 4: So they're the costs leader.

629
00:33:10,480 --> 00:33:14,080
Speaker 12: Elon Musk is very much like a modern day Rockefeller,

630
00:33:14,120 --> 00:33:16,800
Speaker 12: where he's very focused on costs. Then you've got Starlink,

631
00:33:16,840 --> 00:33:19,840
Speaker 12: and you've got Starlink, which you know his Leapfrog Telcom

632
00:33:20,680 --> 00:33:24,040
Speaker 12: cash Cow clearly the crown jewel within the trifacta of

633
00:33:24,120 --> 00:33:26,480
Speaker 12: the three engine Empire. They've got a lot of people

634
00:33:26,600 --> 00:33:29,000
Speaker 12: may not realize they've got a five pricing tier model

635
00:33:29,240 --> 00:33:33,240
Speaker 12: where they charge lowest price for domestic defense, and then

636
00:33:33,280 --> 00:33:38,720
Speaker 12: they have maritime, and then they have they have aviation,

637
00:33:38,960 --> 00:33:42,040
Speaker 12: which is the strongest piece. It's five times three hundred

638
00:33:42,040 --> 00:33:45,440
Speaker 12: and thirteen times more for aviation using the same satellite

639
00:33:45,480 --> 00:33:47,760
Speaker 12: that they use for domestic So when you have a

640
00:33:47,840 --> 00:33:51,640
Speaker 12: five pricing tier model that's really unique and we think

641
00:33:51,840 --> 00:33:56,000
Speaker 12: going to be extraordinary, then of course we've got the wildcard,

642
00:33:56,120 --> 00:33:58,600
Speaker 12: which is where you have the optionality on the data

643
00:33:58,640 --> 00:33:59,400
Speaker 12: centers in the sky.

644
00:34:00,120 --> 00:34:02,600
Speaker 2: A lot about the neocloud business. If they played a

645
00:34:02,720 --> 00:34:04,200
Speaker 2: pretty good short term game.

646
00:34:04,680 --> 00:34:06,040
Speaker 4: They if they pull this off.

647
00:34:06,880 --> 00:34:09,680
Speaker 12: You know this, this justifies evaluation in them some if

648
00:34:09,680 --> 00:34:11,600
Speaker 12: they pull this off where they can actually get data

649
00:34:11,640 --> 00:34:14,120
Speaker 12: centers in the sky and they can get energy twenty

650
00:34:14,160 --> 00:34:17,719
Speaker 12: four seven, you know, empowering solar at five to ten times.

651
00:34:18,040 --> 00:34:19,799
Speaker 2: Just really quick. So we're going to hit a break

652
00:34:19,840 --> 00:34:22,880
Speaker 2: pretty soon. Just reflect, where does this SpaceX IPO ranking

653
00:34:22,920 --> 00:34:24,759
Speaker 2: your career in the market? Well, very quick.

654
00:34:24,800 --> 00:34:27,440
Speaker 12: From my career, it's number one right my career. It

655
00:34:27,680 --> 00:34:31,400
Speaker 12: repositioned our fund, our thesis, and it put a spotlight

656
00:34:31,840 --> 00:34:35,520
Speaker 12: on our VC lens where we get companies that the

657
00:34:35,600 --> 00:34:38,160
Speaker 12: same way the VCS select companies publicly trade companies. We

658
00:34:38,200 --> 00:34:40,759
Speaker 12: got into video back in two thousand and five. We've

659
00:34:40,800 --> 00:34:42,920
Speaker 12: held a twenty one years. We see SpaceX as a

660
00:34:42,960 --> 00:34:44,480
Speaker 12: long term hold, not unlike that.

661
00:34:44,880 --> 00:34:46,560
Speaker 2: Joel Schulman from here shows it's great to have you

662
00:34:46,640 --> 00:34:48,120
Speaker 2: here in New York City next to me, Thank you

663
00:34:48,239 --> 00:34:50,839
Speaker 2: very much. Coming up, I'm going to talk to Vanessa Laco.

664
00:34:50,960 --> 00:34:53,000
Speaker 2: She joins us to talk about her new venture firm.

665
00:34:53,440 --> 00:34:57,920
Speaker 2: I'm covering early value in ai seed pre seed and

666
00:34:58,000 --> 00:35:01,000
Speaker 2: what's happening with valuations in private market right now. That's next.

667
00:35:01,239 --> 00:35:15,320
Speaker 2: This is Bloomberg Tech, the biggest debates in benched capital

668
00:35:15,400 --> 00:35:19,320
Speaker 2: right now are about pricing, valuations, competition, and where value

669
00:35:19,360 --> 00:35:22,799
Speaker 2: in AI will ultimately ultimately accrue, even at the very

670
00:35:22,840 --> 00:35:26,680
Speaker 2: earliest stages. Joining us now is Vanessa Laco, co founder

671
00:35:26,760 --> 00:35:29,640
Speaker 2: of Premise, adventure firm investing in AI startups at the

672
00:35:29,719 --> 00:35:32,560
Speaker 2: pre seed and seed stage, and before launching Premise, she

673
00:35:32,640 --> 00:35:36,160
Speaker 2: spent nearly a decade as a general partner at Nea. Vanessa,

674
00:35:36,200 --> 00:35:42,120
Speaker 2: welcome back to Bloomberg Tech. Let's start with the big idea,

675
00:35:42,239 --> 00:35:44,160
Speaker 2: right you know, I've written a lot this year so

676
00:35:44,280 --> 00:35:46,759
Speaker 2: far of what's the point of calling a seed round

677
00:35:46,800 --> 00:35:50,480
Speaker 2: a seed round. The numbers are getting bigger, the entities

678
00:35:50,520 --> 00:35:53,080
Speaker 2: are getting smaller. You know, there are founders who are

679
00:35:53,160 --> 00:35:56,480
Speaker 2: just a trio of people commanding a very large debut

680
00:35:56,640 --> 00:35:59,640
Speaker 2: check where you guys are making a big conviction call

681
00:35:59,680 --> 00:36:02,160
Speaker 2: on those people. Just reflect on the state of that

682
00:36:02,320 --> 00:36:03,040
Speaker 2: market right now.

683
00:36:04,719 --> 00:36:07,319
Speaker 13: Yes, it's very competitive, and yes there are these eye

684
00:36:07,400 --> 00:36:11,280
Speaker 13: popping seed rounds that everyone writes about, right the billion

685
00:36:11,320 --> 00:36:14,319
Speaker 13: dollar seed rounds. But the truth is that those are

686
00:36:14,840 --> 00:36:17,120
Speaker 13: not the majority of the rounds that are getting done.

687
00:36:17,600 --> 00:36:21,320
Speaker 13: There's still a lot of value that can be created

688
00:36:21,400 --> 00:36:24,880
Speaker 13: at the earliest stages. We basically see it in three buckets.

689
00:36:25,200 --> 00:36:29,000
Speaker 13: You know, at the earliest stages, you have founders who

690
00:36:29,080 --> 00:36:32,239
Speaker 13: may be dropped out of school, maybe they are two, three,

691
00:36:32,320 --> 00:36:34,000
Speaker 13: four years out of school, but they have a great idea,

692
00:36:34,080 --> 00:36:37,319
Speaker 13: they have a very enthusiastic initial user base. We think

693
00:36:37,320 --> 00:36:39,239
Speaker 13: there's a lot of opportunity there. You can get those

694
00:36:40,160 --> 00:36:43,000
Speaker 13: at your typical pre seed seed prices. There's like the

695
00:36:43,080 --> 00:36:46,320
Speaker 13: mental bucket, which are founders, maybe they went through a combinator,

696
00:36:46,440 --> 00:36:49,160
Speaker 13: maybe they've already raised a small round, and you see

697
00:36:49,320 --> 00:36:53,279
Speaker 13: incredible traction at the earliest stages. Right, those are more

698
00:36:53,360 --> 00:36:55,520
Speaker 13: expensive than they've historically been, but they're still within the

699
00:36:55,600 --> 00:36:58,640
Speaker 13: by box of seed. And then you have, yes, those

700
00:36:58,719 --> 00:37:01,920
Speaker 13: repeat founders, the teams that's been out of deep mind

701
00:37:02,400 --> 00:37:05,359
Speaker 13: that do get those eye popping valuations. But the truth

702
00:37:05,480 --> 00:37:07,719
Speaker 13: is a lot of that is deep risked because there's

703
00:37:07,760 --> 00:37:11,040
Speaker 13: also eye popping acquisitions of those teams, and so the

704
00:37:11,160 --> 00:37:14,920
Speaker 13: risk reward actually does net out in those cases the

705
00:37:15,040 --> 00:37:16,200
Speaker 13: risks and though they make.

706
00:37:16,120 --> 00:37:19,319
Speaker 2: Red headlines, the risk reward or the potential exit would

707
00:37:19,360 --> 00:37:21,640
Speaker 2: factor I imagine into the term sheet. But for like

708
00:37:21,760 --> 00:37:24,440
Speaker 2: bucket number one, how do you do the math on

709
00:37:24,520 --> 00:37:27,440
Speaker 2: the term sheet, Like how are you modeling for future

710
00:37:27,520 --> 00:37:30,240
Speaker 2: revenues or like does there need to be a future

711
00:37:30,239 --> 00:37:33,080
Speaker 2: revenue at that point? Like even a business model.

712
00:37:34,400 --> 00:37:36,600
Speaker 13: There has to be a semblance of a business model.

713
00:37:37,640 --> 00:37:40,280
Speaker 13: What we're looking for at the earliest stages are the founders,

714
00:37:40,320 --> 00:37:43,040
Speaker 13: though it is very much a bet on the founders

715
00:37:43,520 --> 00:37:45,840
Speaker 13: and what markets they want to build in. The product

716
00:37:45,920 --> 00:37:48,560
Speaker 13: that they pitch us very rarely ends up being the

717
00:37:48,680 --> 00:37:52,440
Speaker 13: thing that takes off and raises the next round of capital.

718
00:37:53,120 --> 00:37:56,480
Speaker 13: What we're underwriting is what do or what's the probability

719
00:37:56,560 --> 00:37:59,640
Speaker 13: that this team can figure out a great product for

720
00:37:59,760 --> 00:38:02,120
Speaker 13: their incial customer base in a market that we think

721
00:38:02,320 --> 00:38:06,400
Speaker 13: is expanding rapidly. And if there's a high probability of that,

722
00:38:06,760 --> 00:38:10,360
Speaker 13: they get a higher price point. And if there's you know,

723
00:38:10,680 --> 00:38:12,400
Speaker 13: kind of we have to really squint to see if

724
00:38:12,440 --> 00:38:14,560
Speaker 13: the market can expand or if there's room for a

725
00:38:14,640 --> 00:38:18,040
Speaker 13: new product, then the valuation reflects that as well. But

726
00:38:18,160 --> 00:38:20,240
Speaker 13: it's the founder we're underwriting the founders.

727
00:38:20,520 --> 00:38:24,920
Speaker 2: You're a founder of premise, Why make that decision, you know,

728
00:38:25,080 --> 00:38:26,839
Speaker 2: after a long period of time to leave a big

729
00:38:26,960 --> 00:38:30,080
Speaker 2: firm and go it alone. What does that allow you

730
00:38:30,200 --> 00:38:32,160
Speaker 2: to do that you couldn't do otherwise at any A.

731
00:38:33,160 --> 00:38:34,560
Speaker 13: Well, the good news is I'm not alone. I have

732
00:38:34,640 --> 00:38:37,800
Speaker 13: a co founder who also left. She left light Speed,

733
00:38:37,880 --> 00:38:40,320
Speaker 13: and so we joined together. But it's the same story

734
00:38:40,560 --> 00:38:43,400
Speaker 13: that our founders tell us. It's I was working in

735
00:38:43,440 --> 00:38:46,279
Speaker 13: a big organization. I saw a lot of opportunities. I

736
00:38:46,400 --> 00:38:48,320
Speaker 13: wanted to move fast and be nimble. I wanted to

737
00:38:48,400 --> 00:38:51,839
Speaker 13: try things out, and for whatever reasons, there wasn't enough

738
00:38:51,920 --> 00:38:56,319
Speaker 13: space or time or priorities to go down that path.

739
00:38:56,480 --> 00:38:59,560
Speaker 13: So at some point you get enough conviction in your

740
00:38:59,600 --> 00:39:02,719
Speaker 13: idea and what you want to build that you kind

741
00:39:02,760 --> 00:39:05,560
Speaker 13: of have to launch, like there's no other path for you.

742
00:39:07,320 --> 00:39:11,319
Speaker 2: Vanessa Laco, co founder of Promise Premise formerly of Anya,

743
00:39:11,520 --> 00:39:14,000
Speaker 2: back on Bloomberg Tech walking us what's happening at the

744
00:39:14,000 --> 00:39:17,439
Speaker 2: earliest stages of venture funding. Thank you very much. Let's

745
00:39:17,440 --> 00:39:19,200
Speaker 2: get through some of the other big tech headlines out

746
00:39:19,200 --> 00:39:21,759
Speaker 2: there with Bloomberg's You Hira and Anti you hiram Hi

747
00:39:22,000 --> 00:39:23,040
Speaker 2: ed it's time.

748
00:39:22,960 --> 00:39:26,680
Speaker 14: Now for talking tech. First up, Chinese AI firms like

749
00:39:26,840 --> 00:39:29,480
Speaker 14: ten Cents, Ali, Baba, and Huawei are opting out of

750
00:39:29,640 --> 00:39:33,720
Speaker 14: Nvidia in favor of local AI suppliers. The Bloomberg Intelligence

751
00:39:33,760 --> 00:39:37,880
Speaker 14: Survey reveals executives in the country say they'll allocates forty

752
00:39:37,960 --> 00:39:41,080
Speaker 14: six percent of their budget for AI accelerators to domestic

753
00:39:41,200 --> 00:39:44,560
Speaker 14: products over the next twelve months. That's up from thirty

754
00:39:44,680 --> 00:39:50,560
Speaker 14: percent today. Plus Nvidia is facing another challenge out of China.

755
00:39:50,640 --> 00:39:53,560
Speaker 14: Reuters is reporting Deep Seek has plans to develop its

756
00:39:53,640 --> 00:39:57,040
Speaker 14: own chip to power AI systems. They'll be designed for

757
00:39:57,160 --> 00:39:59,840
Speaker 14: the inference stage, where AI models, of course learn to

758
00:40:00,040 --> 00:40:04,120
Speaker 14: generate responses to you first questions and sentient to a

759
00:40:04,200 --> 00:40:08,240
Speaker 14: semiconductor in AI software company backed by giants like Intel

760
00:40:08,320 --> 00:40:12,600
Speaker 14: and Microsoft, is planning to go public. The California based

761
00:40:12,600 --> 00:40:15,640
Speaker 14: startup has raised three hundred and eleven million dollars from

762
00:40:15,719 --> 00:40:21,880
Speaker 14: investors to date, tabbing investors growing enthusiasm for chip technology.

763
00:40:21,680 --> 00:40:23,880
Speaker 2: Ed okay, thank you, Hira. Now coming up, the biggest

764
00:40:23,960 --> 00:40:26,640
Speaker 2: names in tech and media the gathering for their annual

765
00:40:26,680 --> 00:40:30,400
Speaker 2: summer getaway. In the exclusives Some valley resort in Idaho

766
00:40:30,520 --> 00:40:33,520
Speaker 2: stay June for the details. Next, this is Bloomberg Tech.

767
00:40:46,080 --> 00:40:48,720
Speaker 2: It's the time of the year where billionaires let loose.

768
00:40:49,000 --> 00:40:52,240
Speaker 2: Some valley resort in Idaho is hosting its annual summer

769
00:40:52,320 --> 00:40:55,920
Speaker 2: camp exclusively for those in the three Comma Club. Jeff Bezos,

770
00:40:56,200 --> 00:40:59,800
Speaker 2: Sam Altman, Dario Amaday are among the tech leaders expected

771
00:40:59,840 --> 00:41:04,120
Speaker 2: to end the invite only retreat. Bloomberg's Michelle Davis joins

772
00:41:04,200 --> 00:41:07,080
Speaker 2: us from Sam Valley on the ground. For the Bloomberg

773
00:41:07,120 --> 00:41:09,640
Speaker 2: Tech audience that might not be familiar, this is the

774
00:41:09,719 --> 00:41:15,600
Speaker 2: Allen and COTMT conference, Super private, super exclusive, and it's

775
00:41:15,640 --> 00:41:18,440
Speaker 2: all historically been about deals. Set the scene for us.

776
00:41:21,960 --> 00:41:24,640
Speaker 15: So, as you said, Ed, this is a conference that

777
00:41:24,920 --> 00:41:28,080
Speaker 15: has historically been about deals. It's a conference that really

778
00:41:28,120 --> 00:41:31,480
Speaker 15: got its roots up more than forty years ago with

779
00:41:31,640 --> 00:41:34,680
Speaker 15: the media and cable industry, and in recent years, of course,

780
00:41:34,800 --> 00:41:38,200
Speaker 15: tech and AI especially have become an increasing focus. I

781
00:41:38,239 --> 00:41:40,919
Speaker 15: think what's really interesting about this year though, is we're

782
00:41:41,040 --> 00:41:44,360
Speaker 15: on the heels of paramount Warner Brothers, you know, closing

783
00:41:44,440 --> 00:41:46,759
Speaker 15: in on their one hundred and ten billion dollar deal

784
00:41:47,239 --> 00:41:49,279
Speaker 15: that's going to close soon, and once it does, it's

785
00:41:49,360 --> 00:41:53,280
Speaker 15: really resetting the chessboard here in media, and we're finally

786
00:41:53,280 --> 00:41:55,759
Speaker 15: at the point where it feels like the floodgates are

787
00:41:55,760 --> 00:41:57,120
Speaker 15: going to open and we're going to see a lot

788
00:41:57,200 --> 00:41:59,239
Speaker 15: more M and A in the media industries that we

789
00:41:59,360 --> 00:42:01,879
Speaker 15: hadn't seen as much in past years. So it feels

790
00:42:01,920 --> 00:42:04,040
Speaker 15: like that's going to be a bigger focus here than

791
00:42:04,120 --> 00:42:07,520
Speaker 15: it had been in recent years. Just last week, Comcast

792
00:42:07,560 --> 00:42:10,520
Speaker 15: announced that it is going to separate NBC Universal from

793
00:42:10,560 --> 00:42:13,719
Speaker 15: its cable unit. That's seen from analysts as a bit

794
00:42:13,760 --> 00:42:15,760
Speaker 15: of a for sale sign on both of those units.

795
00:42:16,160 --> 00:42:18,480
Speaker 15: Box as Your Remember has announced it of buying Roku,

796
00:42:18,600 --> 00:42:22,000
Speaker 15: the streaming platform, for twenty two billion dollars, and Netflix

797
00:42:22,560 --> 00:42:26,160
Speaker 15: still pretty much we're sure wants a to buy a

798
00:42:26,200 --> 00:42:29,040
Speaker 15: streaming asset, so I mean a studio. So we'll see

799
00:42:29,280 --> 00:42:30,319
Speaker 15: what folks will be doing here.

800
00:42:30,680 --> 00:42:33,080
Speaker 2: The mountains of Idaho is a great place to walk

801
00:42:33,120 --> 00:42:35,200
Speaker 2: your dog, to have a hike, to ride a bike.

802
00:42:35,239 --> 00:42:37,920
Speaker 2: I've seen the tech CEOs and billionaires do it so

803
00:42:38,080 --> 00:42:41,799
Speaker 2: many times every year. The key names behind a deal there.

804
00:42:41,840 --> 00:42:45,920
Speaker 2: I remember Elon Musk and Twitter, Microsoft and Activision with

805
00:42:46,120 --> 00:42:48,480
Speaker 2: the Warner Brothers Paramount deal are the key names there.

806
00:42:49,400 --> 00:42:51,600
Speaker 15: We're expecting the key names to be here. A lot

807
00:42:51,680 --> 00:42:54,000
Speaker 15: of the invite list looks exactly like it's looked for

808
00:42:54,080 --> 00:42:57,200
Speaker 15: the past twenty years. It's it's Tim Cook, it's Jeff Bezos,

809
00:42:57,239 --> 00:42:59,279
Speaker 15: it's Mark Zuckerberg. But there are going to be some

810
00:42:59,440 --> 00:43:03,359
Speaker 15: new names as well. The incoming CEO from Apple, John

811
00:43:03,440 --> 00:43:06,560
Speaker 15: Turnis is expected to be here. Josh Domorrow, who has

812
00:43:06,640 --> 00:43:09,279
Speaker 15: come in years past, will be here for the first

813
00:43:09,320 --> 00:43:12,560
Speaker 15: time in his capacity as CEO of Disney. And of

814
00:43:12,640 --> 00:43:16,200
Speaker 15: course there's always the special guests who know the professors

815
00:43:16,600 --> 00:43:20,880
Speaker 15: and politicians who give speeches during the official programming that

816
00:43:20,960 --> 00:43:21,720
Speaker 15: kicks off tomorrow.

817
00:43:21,920 --> 00:43:24,120
Speaker 2: We will speak to bloombergs Michelle Davis throughout the week.

818
00:43:24,200 --> 00:43:26,439
Speaker 2: Thank you very much. That does it for this edition

819
00:43:26,760 --> 00:43:29,360
Speaker 2: of Bloomberg Tech. One hour from now, tune into a

820
00:43:29,480 --> 00:43:32,800
Speaker 2: live and interactive Q and a livestream. Bring all of

821
00:43:32,920 --> 00:43:37,000
Speaker 2: your burning Microsoft and Expot questions to me and Bloomberg's

822
00:43:37,040 --> 00:43:39,320
Speaker 2: video game industry reporter Jason Schreier. We're going to be

823
00:43:39,400 --> 00:43:43,320
Speaker 2: talking all things video games one pm Eastern on Bloomberg

824
00:43:43,360 --> 00:43:45,680
Speaker 2: dot Com. It's been a massive show. There is so

825
00:43:45,840 --> 00:43:48,080
Speaker 2: much happening in markets right now, a lot of it

826
00:43:48,239 --> 00:43:51,080
Speaker 2: driven by the chip sector and memory and particularly recap

827
00:43:51,160 --> 00:43:54,040
Speaker 2: on the podcast. A lot of good and interesting conversations.

828
00:43:54,280 --> 00:43:58,000
Speaker 2: The pod is on Apple, Spotify and iHeart Thank you

829
00:43:58,160 --> 00:44:00,120
Speaker 2: very much for joining us from New York City. This

830
00:44:00,280 --> 00:44:02,320
Speaker 2: is being back tack h